This is the VR Tenga demo, made for an Oculus Rift game jam held in Japan on the weekend. It uses some basic software, the Oculus Rift virtual reality headset and some...other equipment to simulate sexual acts.

Check out the VR Tenga demo in action (don't worry, the men experimenting with it are fully clothed, but you get the idea).

As of now, this kinda just looks like a flesh jack with (awkward) mobility. Presumably this tech will evolve further and we assume fully interactive porn is probably on the way.